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Still from “The Mandalorian” on Disney+.
Disney
Disney shares were on the rise to kick off 2020 after some Wall Street analysts estimated significant growth from its new streaming service and recommended clients keep buying the stock.
Rosenblatt Securities analyst Bernie McTernan expects Disney+ to attract 25 million users by the end of the first quarter of 2020, he said in a note Wednesday. He previously estimated that figure to be 21 million subscribers.
“Following results from our 4th streaming video survey over the past 3 months we are raising our estimates for Disney+, now assuming 25M subscribers globally at the end of FY1Q20, up from 21M prior,” he said. “Awareness of the service and penetration of respondents has continued to trend higher throughout our surveys.”
McTernan reiterated a $175 price target and a buy rating on Disney, and added that the growth of Disney+ may be pulling some users away from Netflix.
Disney shares rose more than 1% Thursday morning. The stock jumped more than 31% in 2019.
“For Disney+ subscribers, 29% indicated they unsubscribed from another streaming service as a result of subscribing to Disney+, and 9% specifically indicating they unsubscribed to Netflix,” McTernan said.
Disney has not disclosed subscriber numbers since the launch of Disney+ in Nov. when the company said it signed up a whopping 10 million subscribers in one day. Disney has said it will not disclose its own numbers again until its next quarterly report in February. Last month, however, independent app-tracking company Apptopia reported Disney+ mobile downloads of 22 million, and said the app has averaged 9.5 million daily active mobile users, ranking in the top spot in both Apple and Google‘s app stores.
‘Conservative’ guidance
After analyzing 29 streaming video entertainment services, Bank of America analysts said in a note Thursday that Disney+ continues to lead growth in the market. The analysts added that Disney’s current long-term growth projections for Disney+ appear to be low.
“Whether or not Disney+’s early subscriber count of >10mn fully converts into LT paying customers given an extensive amount of promo activity and high profile original content at launch (e.g. 7-days free, 1-year free for VZ’s ~20mn unlim./5G wireless and FiOS accounts, The Madalorian), we believe DIS’s FY24E guidance for 60-90mn subs globally continues to appear conservative (incl. 20-30mn subs in the U.S.),” the analysts said.
Bank of America has a $168 price target and a buy rating on Disney.
As the young streaming platform continues to mature, the Bank of America analysts said, Disney will now have to manage to enlist new subscribers while retaining those who are already signed up. Original content may be the path to sustained growth, they said.
“While anecdotal evidence of elevated library consumption on the service is encouraging (both for DIS and the syndication market at large), we cont. to believe more original content will be needed to drive subscriber acq. and retention efforts,” they said.
The platform has only launched in the U.S., Canada and the Netherlands so far. It will launch in Europe on March 31 and in Latin America in October, paving the way for more growth potential.
— With reporting by Michael Bloom
